EU pushes anew lifting of foreign equity curbs

Manuel T. Cayon | BusinessMirror | June 24, 2019

Last updated on June 24th, 2019 at 01:47 am

DAVAO CITY—The ambassador of the Europeran Union batted anew for the removal of the restriction on foreign ownership in order to rev up the economy, and gave assurances that the EU would be generally “happy” to work out strategies to stimulate new and more economic activities for Mindanao.

The European Chamber of Commerce in the Philippines (ECCP) also pitched its recommendation on the government’s economic reforms. While it lauded the strides in correcting gaps in taxation, investment security and foreign investments, it suggested further cuts in corporate income tax and a moderate approach to contractualization, which foreign and Filipino business groups have made an issue of. Congress recently passed the security of tenure bill proscribing all forms of illegal contractualization, but employer groups said this was too sweeping.

Nabil Francis, incumbent president of the ECCP, the oldest European Chamber outside of Europe with close to 800 members, said the ECCP wanted to be granted certain exemptions from the policy to allow foreign companies to contract some labor for certain limited work.

Ownership restrictions

“On the EU side, we highlight the 60-40 ownership on foreign direct investment. In order to attract more investments, the economy may have to remove the restriction,” said EU Ambassador Franz Jessen in his speech before the Davao City Investment Conference in Davao on Thursday.

He said European businessmen were particular about having full control of their operations overseas, which include full ownership of their facilities. Countries with this particular offer commonly attract a number of good investments, Jessen said, “and their economies grow very fast because this [policy] is good for the companies and this is also good for the respective host countries.”

“Only look north and see what growth these countries have experienced,” he added.

He said the EU only wishes to see a continued adherence to open market and full access to economic benefits.

Will on reforms

Nonetheless, he lauded the audacity with which the Duterte administration implemented the series of game-changing economic reforms.

“I just hope and look at the consistency of the implementation of the 10-point agenda of the President in the remaining three years,” Jessen added.

Francis of ECCP said the Philippines has done an “exceptional” feat in pulling out a consistent high growth rate in the last few years.

He said it would be interesting to hear how the Philippines did it.  Tourism, for instance, is one major driver of the growth, but he noted that the sector was experiencing a slowdown in Europe due to several factors, including the lingering effect of Britain’s exit from the EU.

Last year, the Philippines grew by 6.2 percent, the second-highest among the 10 member-economies of the Association of Southeast Asian Nations. It was second to Vietnam’s 7.1 percent. He said the ECCP wanted some more strides in the economy. “Thirty percent is still a high corporate income tax compared to the other Asean countries. We are looking at 20 percent in the future.”

“We agree with the points raised by the EU on the issues it raised to further improve the reforms being done,” Francis said. Like the EU, the ECCP has suggested a constitutional amendment to the foreign equities restriction, the bank secrecy law and the build-operate-transfer act.

He said the country should also do more work in the area of traffic and transportation, which eats up an estimated $66 million a year.

Jessen said the EU would like to work out with the Duterte administration strategies to develop the country, but especially in Mindanao.

Source: https://businessmirror.com.ph/2019/06/24/eu-pushes-anew-lifting-of-foreign-equity-curbs/